6. The Minister of National Defence said that the NATO Temporary Council Committee (TCC) had set up an Executive Bureau and a Screening and Costing Staff to examine the cost of the Medium Term Defence Plan, determine what econ­omies could be made and assess what more member nations could do in the mili­tary field without undue strain.⁶³ The Executive Bureau had submitted questionnaires regarding national contributions under the Plan to be answered at an early date. The answers would be prepared by the Departments of National Defence and Finance. The costing questionnaire sought information under the headings of military personnel, operation and maintenance, construction and procurement and production, for future years.

Following the meeting of October 2nd, 1951, the Chairman, Chiefs of Staff Committee, had given the Standing Group Canada's views on its proposals for Canadian contributions towards closing the gap.⁶⁴ As a result of this and other rep­resentations, Standing Group paper SG 20/37,? a revision of the Medium Term Plan incorporating General Eisenhower's views, has been amended. This paper had been forwarded to the Executive Bureau as a basis for the costing exercise. It was in four parts: (1) revised requirements as amended to suit General Eisenhower's requirements; (2) agreed national contributions; (3) proposed expanded national contributions; and (4) a timephased buildup.

The agreed Canadian contributions were correctly shown as:

Navy

1 aircraft carrier                           2 cruisers

42 escort vessels                         25 coastal escorts

14 minesweepers                        40 maritime aircraft

Army

1/3 division by D-Day

Air Force

203 aircraft

The earlier recommendations in the paper for further Canadian naval contribu­tions had been replaced by a recommendation that Canada contribute 10 escorts towards closing the residual naval gap. The Standing Group had been informed that Canada could not complete any additional escorts by mid-1954.

The paper now showed the agreed R.C.A.F. contribution of 203 aircraft, with a notation that Canada had indicated that, with the utmost endeavour and at the expense of frontline reserves, it could furnish 300 aircraft.

The earlier recommendation in the paper that Canada provide in Europe (in addition to its agreed contribution of 1/3 division by D-Day) 1 2/3 Army divisions by D plus 30, had been replaced by a recommendation that Canada provide an additional 2/3 division by D plus 30 and a further division "subsequent to D plus 30", with the comment that while, if hostilities started without warning, the time required for transportation to Europe made it extremely difficult for North America substantially to increase its contributions by D plus 30, if there were warning or the movement of forces from North America were started before DDay, Canada (and the United States) would be able to meet the earlier phasing proposed.

The Canadian Chiefs of Staff had advised the Standing Group that the additional 2/3 division should not be shown in SG 20/37 in the manner indicated since Gen­eral Eisenhower could not count on its availability by D plus 30. They had recom­mended that it be shown as available subsequent to D plus 30 with a note that, if there were warning or the movement of forces from North America started before DDay, Canada would be able to meet the earlier phasing. The second division could not be provided until D plus 180 at the earliest.

The appropriate approach to costing the Canadian share of the Medium Term Plan appeared to be to assume that the whole defence budget, less war expenditures on account of the 25th Brigade while engaged on United Nations activities, was primarily for NATO purposes. Since the figures to be given to the Executive Bureau should be as close as possible to those eventually to be announced in Parlia­ment as the defence budget, it was felt that they should have prior governmental approval.

A committee of senior officials Mr. Drury, General Foulkes and Mr. Bryce had therefore been set up to make a preliminary screening of estimates so as to ascertain as quickly as possible a reasonable figure for the fulfilment of the 1952­53 portion of Canada's contribution to the Medium Term Plan, and an approxima­tion of the requirement for the two following years. This committee, which would continue to examine the Services' requirements, had produced a preliminary costed plan, "Mark 111", in a form suitable for the Executive Bureau.

An explanatory memorandum had been circulated.

(Minister's memorandum, November 7, 1951, "Costing of defence requirements Medium Term Defence Plan for submission to Temporary Council Commit­tee" and attached "Mark III" Cabinet Document D311).

Mark III was similar to Mark V (Cabinet Document D273?), the 4year defence programme which the Cabinet had considered on January 24th, 1951 and to which it had given general approval on February 22nd, 1951.⁶⁵ It consisted of a summary of the Canadian defence programme up to March 31 st, 1955; forecasts of the defence manpower buildup and of the average monthly intake of the active forces during the period; estimates of the total annual costs of the various components of the programme, including mutual aid; a summary of estimated costs under the pro­gramme of military personnel, construction, major procurement and production and operation and maintenance; and a breakdown of the estimated major procurement and production costs.

The main differences between Mark V and Mark III were that the latter provided for:

(a) under the heading of the Integrated Force (taking into account the decision to have a full brigade group instead of a battalion in Korea), 1/3 division in Europe, together with the buildup in Canada of 2/3 division and a minimum of reinforce­ments, indicating that, of this 2/3 division, a brigade group and reinforcement organization were temporarily employed in Korea, and that the element in Canada would provide for the training of reinforcements and rotation for forces in Europe and Korea;

(b) (in accordance with the change of plans made after the preparation of Mark V), all of the 11 R.C.A.F. squadrons (203 aircraft) in Europe to be equipped with F­86's, instead of partly equipped with CF100's. The CF100's were to be kept for the air defence squadrons in Canada;

(c) an additional operational training unit for longrange transport personnel;

(d) some reshuffling of types and numbers of aircraft required, but no overall increase in requirements;

(e) some expansion of the Defence Research Board programme;

(f) increased financial requirements for administration, largely because of the expansion of inspection services with the increased workload, and the inclusion of $40 million to be spent on a new Defence Headquarters up to March 31 st, 1955 the latter proposal requiring consideration as to policy in due course;

(g) inclusion in the defence programme of the approved mutual aid programme and of infrastructure costs and contributions to SHAPE and subordinate commands;

(h) modifications in the forecast of the manpower buildup of the active forces to March 31st, 1955, the Navy figure for that date being down from 21,000 to 20,450 because it was not now considered possible to obtain some 500 of the officers required; the Army figure being up from 49,000 to 57,000 owing to the decision to despatch a full brigade group to Korea; and the Air Force figure, including women, being up from 43,240 to 44,200 as a result of the decision to man some of the additional radar stations being built jointly with the United States.

The forecast of the average monthly intake of the active forces in 1952-53 was below that for 1951-52, which was higher because of the recent special campaign to raise the 27th Infantry Brigade. The main unknown was how many of the 4,000­odd men who had enlisted in the Army for 18 months and would be due for dis­charge in February and March, 1952, would reenlist. The results of the recruiting drives for the Special Force and the 27th Brigade had shown that extra men could be obtained for the Army by special campaigns.

7. The Deputy Minister of National Defence said that the estimates of the costs of the defence programme for 1951-52 to 1954-55 and the summary of costs by major categories represented the type of information required by the Executive Bureau of the TCC. These figures had first been screened by the Services with the Depart­ment of Defence Production from the point of view of the possibilities of deliv­eries. A subsequent examination by the abovementioned committee of senior officials, in consultation with the Services, had resulted in the elimination of items that were not militarily essential.

Since there had been little time to prepare the data required by the Executive Bureau, the figures of $2,287 million for budgetary expenditures and $2,455 mil­lion for cash disbursements on the defence programme in 1952-53 represented only a first approximation of the cost of the programme in that year. His department would have figures that could be better justified when it submitted draft defence estimates in January.

Meanwhile, the present figures did give a good indication of financial require­ments in 1952-53, although those for the two later years were inevitably less firm. It was hoped that, on the understanding that it would be made clear that the figures for 1953-54 were in no sense final, it could be agreed that the expenditures forecast for the next three years be used as the presently estimated costs of the programme in completing the returns to be made to the Executive Bureau and in the discus­sions of the Canadian programme that the Minister of Finance would be having with the Bureau on November 16th. While there were still certain unknowns, such as the cost of some of the types of Army equipment to be ordered, the officials concerned in the Department of Finance had agreed that the estimates of expendi­tures for the next three years represented the approximate amounts that the present defence programme would cost and that, if less than $2,287 million were provided for 1952-53, expenditures would have to be deferred to the two following years, resulting in increased financial requirements then. A number of involuntary defer­ments during the current fiscal year explained in part the higher estimates than originally forecast for expenditures in 1952-53.

8. The Minister of Defence Production wondered if the proposed expansion of the Defence Research Board development programme was wise. It appeared desirable for Canada to do less development and more production in the case of the CF100, the Orenda engine and other projects. Data on new types of equipments that it was desired to produce in Canada and training in preparation for the production of such items could be obtained in the United Kingdom which was devoting a very large effort to development.

9. The Chairman, Defence Research Board said that progress with production of the CF100 and the Orenda appeared to be a problem for Avro management. The company had been good in the development field but poor in organizing produc­tion. Last year the development shop at Avro had been turned over to production. Most of the airframe and engine development contemplated in the D.R.B. pro­gramme was not related to the CF100 and the Orenda but looked to types to be produced a few years hence. Development of the CF100 and the Orenda did not entail a duplication of work in other countries since a special type of interceptor had been required for Canadian purposes.

Development work on the CF100 and the Orenda was nearing completion and they would go into production fairly soon. The airframe and engine, however, had possibilities of development as a supersonic fighter and the proposal was to provide for a start on this project in 195253. Most of the proposed increase in the D.R.B. development programme was attributable to this project.

It was not possible to do satisfactory and rapid development work on an inter­mittent basis since the development teams became dispersed. Much of the develop­ment programme had been undertaken as a result of allocations of responsibilities between Canada, the United States and the United Kingdom.

10. Mr. Claxton said that the InterService Committee on Development was pre­paring a report on the D.R.B. development programme which could be considered in due course.

11. The Deputy Minister of Finance doubted that quite as much as the $1,465 million forecast in Mark III would be spent on defence in 1951-52.

12. Mr. Drury said that this would depend largely on rates of deliveries during the remainder of the fiscal year. Some 70% of defence expenditures for the year would be on construction and equipment which were handled by other departments. Underspending during the year by his department on the other portions of the pro­gramme would total about $100 million. Despatch of a brigade group to Korea would result in higher expenditures on personnel than originally expected.

Maintenance of both the brigade group in Korea and that proceeding to Europe would be handled by payment of a capitation fee which had still to be agreed upon with the U.S. and U.K. authorities. The U.S. authorities had only recently put for­ward a figure applicable to the 25th Brigade but this had appeared high and the matter was being investigated further. Some interim payments had been made to the United States on account of the 2nd Battalion, Princess Patricia's Canadian Light Infantry, and every effort would be made to arrange for payment, before next March, of amounts owed to the United States and the United Kingdom for mainte­nance of the two brigade groups during 1951-52.

As regards the maintenance of R.C.A.F. squadrons in or proceeding to the United Kingdom, the U.K. authorities had agreed to provide free of charge all available stores for these units, and Vampire aircraft for the squadron presently in the United Kingdom, as an offset against Canadian expenditures in training R.A.F. aircrew. The only outstanding question appeared to be which country would pay for additional construction in the United Kingdom required by the R.C.A.F. which, so far, needed only a depot. The former U.K. Secretary of State for Air had indi­cated agreement to these arrangements which, however, had not been embodied in a formal agreement as the United Kingdom did not wish to have to extend similar facilities to the United States. Squadrons proceeding to the United Kingdom in future would take with them their own F86's.

13. The Minister of Finance said that Mark III indicated the Navy programme to which Canada was committed and would have to carry out whatever the final esti­mate of cost. The same was substantially true with respect to the Air Force programme, although there were some possibilities of modification as regards procurement of aircraft and mobilization stocks. It was less clear whether the whole of the Army programme in Mark III was a commitment as the government had not yet discussed in any detail the cost of the ultimate completion of a corps of 4 divi­sions and 2 armoured brigades in wartime, or of the procurement of mobilization stocks for a force of this size (Mark III, page 2). These questions would have to be studied, and discussed at a later meeting so as to establish firm figures for the costs of the Army programme in future years. He had always felt that the Army pro­gramme would have to be considered in connection with the large air force contemplated.

14. Mr. Claxton thought that the Army programme outlined was as already agreed but recognized that the question of the extent of Army mobilization stocks had not yet been fully discussed.

15. The Chief of the General Staff said that the mobilization stores of ammunition contemplated in the Army programme were limited to first and secondline ammu­nition (e.g. about 250 rounds per gun) for two divisions allocated to NATO, and training scales of ammunition for the remainder of the infantry and armoured forces planned. SHAPE had recently indicated that any forces allocated to the Inte­grated Force up to D plus 90 must have reserves of ammunition for 90 days. Fur­ther, it had been considered desirable to order ammunition in sufficient quantities to ensure economic production runs.

16. Mr. Abbott said that the presently estimated National Defence cash disburse­ments in 195253, totalling $2,455 million, added to expected expenditures of roughly $200 million on defence production, atomic energy, civil defence and other projects in the general field of defence, represented about 13% of the anticipated gross national product in that year and more, he felt, than the country would be prepared to pay or the economy could stand. fie would, however, not object to the Executive Bureau being informed that the present estimates of expenditures in the next three years were initial approximations of costs that had still to undergo fur­ther screening.

17. Mr. Claxton thought that the programme for the next three years that had been submitted was physically attainable from the point of view of production, construc­tion and manpower.

18. Mr. Abbott felt that if the whole programme were retained, the expense would be found high and, with deferments of expenditures, financial requirements for the last two years would be increased. It was quite possible that the programme out­lined, together with the capital investment programme, would impose serious pres­sures on the economy, leading to further rises in the price level. It was estimated that there would be a rise of 3 to 4% during the next year, even assuming that the volume of consumption did not increase. It appeared that the maximum that the public could be persuaded to divert from production in 195253 was $2.4 billion or about 10% of the estimated gross national product including National Defence expenditures and the estimated $200 million to be spent on other projects in the general defence field. The impact of the defence and investment programmes on Canada's balance of payments position was a cause for some concern since there would be deficits of about $700 million this year and $500 million next year, it being contemplated that equipment to the value of $250 million be bought in the United States during 1952.

19. The Prime Minister thought that, while the public would support a deterrent Canadian Army force in Europe in peacetime and a maximum Army effort in war­time, it would probably not be prepared in peacetime to support the stockpiling of substantial mobilization stores since this would compete with civilian supply and might give the impression that Canada was making preparations for war rather than to deter aggression.

20. General Shnonds said that not only forces deployed in peacetime but also the speed with which countries could mobilize in wartime had a deterrent effect on potential aggressors.

21. The Committee, after further discussion, noted the report of the Minister of National Defence regarding preliminary estimates of the costs of the Canadian defence programme during the next three fiscal years and agreed that:

(a) the Minister of Finance and the Departments of National Defence and Finance use these estimates of costs in making the necessary submissions to the Executive Bureau of the Temporary Council Committee, pointing out that the figures were tentative and subject to further screening in Canada;

(b) the Minister of Finance, in discussing the Canadian programme with the Executive Bureau on November 16th, indicate that at present the government did not expect cash disbursements in excess of $2.4 billion, including some $200 mil­lion for defence production, atomic energy, civil defence and other projects in the general field of defence, to be authorized for defence purposes in 1952-53;

(c) reports be prepared on the proposed Defence Research Board development programme, and on plans for the buildup of the Army and the procurement of relevant mobilization stores, for consideration at a subsequent meeting.

⁶³Pour les événement précédents, voir le document 476.
For earlier developments, see Document 476.

⁶⁴Voir le document 391./ See Document 394.

⁶⁵Voir le documents 355 et 365./See Documents 355 and 365.